‘Havoc’

Published: Wednesday, September 11, 2013 at 6:44 a.m.

Last Modified: Wednesday, September 11, 2013 at 6:44 a.m.

Gene Laber of Hendersonville uses the word “nonsense” when thinking about Don Keefauver’s budget fix proposal. “The essence of the proposal is to have the government confiscate the wealth of corporations and the rich, the latter presumably being the infamous 1 percent. This wealth would then be used to support government spending on all sorts of ‘good things.’ The piece ends with the exhortation, ‘Think about it.’ So let’s think about it,” says Mr. Laber. “First, it is important to distinguish between income and wealth. Wealth is an accumulated stock at a point in time.

Household wealth consists of a household’s net worth — assets minus liabilities — that have been accumulated over time.

Income is an amount received during some period of time, such as a year. A household’s adjusted gross income consists of wages and salaries, interest, dividends, pension payments, etc., received during the year.

If we are talking about confiscating wealth, we are seizing accumulated stocks of assets.

Confiscating corporate wealth would mean seizing the assets of corporations. Those consist of things like cash, plants and equipment, land, inventories and financial assets such as Treasury securities. On the other side of corporate balance sheets are claims on those assets — stocks, bonds, notes, bank loans and, in the case of financial corporations, deposits. These claims on corporate assets represent financial assets to others in the economy — pension funds, households, mutual funds and other corporations. So confiscating corporate assets means confiscating financial assets owned by other parties. Households, for example, would be left with only real assets, such as houses and cars, while their financial assets would be worthless, however, such confiscation would not generate money for the government in the same amount as the asset destruction. Only the cash portion of corporate assets could be spent immediately.

That portion probably would amount to 10 percent or less of total corporate assets. The other assets would have to be sold in a market that has been upended by confiscation. Lots of luck with that. A study by a New York University economics professor in 2012 analyzed data on household wealth as of 2010. Households in the top 1 percent had average wealth of $16.4 million. Total wealth in the group would amount to roughly $20 trillion. Confiscating 15 percent of that would run the federal government for one year. If the ‘budget fix’ proposal is couched in terms of income rather than wealth, the top 1 percent in 2010 (the latest year for detailed IRS data) had total income of $1.5 trillion. Confiscating all of that would run the federal government for about half a year.

And we can be fairly confident that these rich folks won’t be going out next year and generating a similar amount of income to be expropriated.

As was suggested, think about it. These nonsense proposals would create havoc in the economy and bring wealth creation and economic growth to a halt.”

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LAST BUT NOT LEAST: The Arts Council of Henderson County is inviting nonprofit organizations to participate in the 54th annual Art on Main fine art/ fine craft arts festival, which will take place Oct. 5 and 6 on Hendersonville’s historic Main Street. The event will give nonprofit organizations the opportunity to educate the public about their work. The deadline to sign up is Sept.

16. Either send an email to acofhc@bellsouth.net or call 693-8504. Space is limited, so participation will be on a first-come, first-served basis.

During Art on Main, more than 70 artists from throughout the Southeast and beyond will exhibit and sell their work along Hendersonville’s Main Street. Demonstrations by many more artists will also be part of the show. Thousands of art lovers are anticipated throughout the weekend.

Hours are from 10 a.m. to 5 p.m. each day.

Reach Lou Parris at 828-694-7836 or molehills@blueridgenow.com.

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